DGR Global Ltd v PT Limited as trustee of the Armour Energy Security Trust [2025] QSC 5

SUPREME COURT OF QUEENSLAND CITATION: DGR Global Ltd v P.T. Limited as trustee of the Armour Energy Security Trust [2025] QSC 5 PARTIES: DGR GLOBAL LTD ACN 052 354 837 (plaintiff) v P.T. LIMITED ACN 004 454 666 AS TRUSTEE OF THE ARMOUR ENERGY SECURITY TRUST (first defendant) PERPETUAL CORPORATE TRUST LIMITED ACN 000 341 533 AS TRUSTEE FOR THE ARMOUR ENERGY NOTE TRUST (second defendant) RICHARD SCOTT TUCKER AND ROBERT WILLIAM HUTSON IN THEIR CAPACITY AS RECEIVERS AND MANAGERS OF ARMOUR ENERGY LIMITED ACN 141 198 414, ARMOUR ENERGY (SURAT BASIN) PTY LIMITED ACN 607 504 905, ARMOUR ENERGY (VICTORIA) PTY LTD ACN 167 298 240, COERA PTY LTD ACN 636 658 574, HOLLOMAN PETROLEUM PTY LTD ACN 126 728 498, CORDILLO ENERGY PTY LTD ACN 636 904 204, MCARTHUR OIL AND GAS LIMITED ACN 648 622 404 AND MCARTHUR NT PTY LTD ACN 649 856 315 (ALL ADMINISTRATORS APPOINTED) (ALL RECEIVERS AND MANAGERS APPOINTED) (third defendant) ADZ ENERGY PTY LTD ACN 672 466 198 (fourth defendant) SHUNKANG HOLDING GROUP CO. LIMITED (a company incorporated in the People’s Republic of China) (fifth defendant) BAKER & MCKENZIE (A FIRM) (sixth defendant) FILE NO/S: BS 15575 of 2023 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 15 January 2025 DELIVERED AT: Brisbane HEARING DATE: 10 January 2025 JUDGE: Hindman J -- 1 of 18 -- 2 ORDERS: 1. The plaintiff provide security for costs of the proceeding by 4pm on Friday 14 March 2025 in a form acceptable to the Registrar. 2. The security for costs be $3,460,000 calculated as: (a) $965,000 in respect of the first and second defendants; (b) $995,000 in respect of the third and fourth defendants; (c) $650,000 in respect of the fifth defendant; (d) $850,000 in respect of the sixth defendant. 3. The security for costs ordered is in respect of the period from the commencement of the proceeding to the first day of trial (inclusive). 4. Rule 674(a) UCPR does not apply to this order. 5. The defendants have leave to make any application for any top up security or for security for costs in respect of the trial not before 24 March 2025. 6. Costs of the applications be reserved. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS – FACTORS RELEVANT TO EXERCISE OF DISCRETION – PLAINTIFF’S OR APPLICANT’S IMPECUNIOSITY – GENERALLY – where the first to sixth defendants applied for security for costs – whether there has been recent material developments concerning the plaintiff’s known financial position – whether there is reason to believe the plaintiff will be unable to pay the first to sixth defendants’ costs Corporations Act 2001 (Cth) s. 1335 (1) Uniform Civil Procedure Rules 1999 (Qld), rr. 670, 674 Beach Petroleum NL v Johnson (1992) 7 ACSR 203 Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (2018) 3 Qd R 143 COUNSEL: A Stumer KC with R Tooth the plaintiff J Menzies for the first and second defendants M Ziebell for the third and fourth defendants L Gamble for the fifth defendant D O’Sullivan KC with S McCarthy for the sixth defendant SOLICITORS: DLA Piper Australia for the plaintiff Corrs Chambers Westgarth for the first and second defendants Johnson Winter Slattery for the third and fourth defendants Thomson Geer for the fifth defendant Hall & Wilcox for the sixth defendant -- 2 of 18 -- 3 Introduction [1] These reasons concern the defendants’ applications for security for costs. The applications were heard on 10 January 2025. The applications were relatively lengthy and have required the court to sit in the usual court vacation period and beyond usual court hearing hours. That is because there is a four week trial scheduled to commence on 22 April 2025. The two to three week trial that had been scheduled to commence on 2 December 2024 was adjourned. All parties have expressed a desire to maintain the new trial dates. All interlocutory disputes therefore have to be heard and determined as expeditiously as possible. [2] Accordingly, these reasons are necessarily presented in a summary type way to ensure the proceeding continues to progress and the parties have the best prospects of maintaining the scheduled trial dates. [3] It should also be noted that this application has been heard and determined on the basis of the state of the case as it exists in relation to the second further amended statement of claim. The plaintiff has applied to further amend its case, but a decision about that remains outstanding and given the matters mentioned above, the court indicated that was the basis upon which these applications for security for costs would be determined. Threshold test [4] There does not appear to me to be any significant dispute between the parties as to the relevant threshold test to be applied: is there reason to believe that the corporate plaintiff will not be able to pay the defendants’ costs if ordered to pay them – see Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (2018) 3 Qd R 143 at [42]-[43]. The plaintiff has asked me to take care not to convert that test, as some cases have suggested, into one that considers simply the risk of the plaintiff being unable to pay costs. A risk assessment approach is not the applicable test. Instead, I must be positively persuaded to a belief (which need not be to the balance of probabilities standard) that the plaintiff will in fact be unable to pay relevant costs at some generally identified future point in time at which those costs would become payable. It is not enough that I consider there just be some risk of that occurring. -- 3 of 18 -- 4 [5] I am persuaded that the threshold test is met in this case. I am positively inclined to accept, and do accept, that the plaintiff will be unable to pay a relevant adverse costs order made against it at the conclusion of an unsuccessful claim at the time such costs would likely became payable (say in the first half of 2026 – allowing for a judgment to have been delivered early in the second half of 2025). I note that a corporation will be unable to pay for the purpose of the test if it can only do so given an extended period of time to realise assets – see Beach Petroleum NL v Johnson (1992) 7 ACSR 203, 205. That does not mean a corporation is relevantly unable to pay unless it has liquid funds on hand - see Monto Coal 2 Pty Ltd v Sanrus Pty Ltd (2018) 3 Qd R 143 at [50] per Gotterson JA. [6] The plaintiff submitted that I would not find the threshold test satisfied for the following reasons, in summary. [7] Its balance sheet as at 30 June 2024 shows assets over liabilities of some $30m. The first matter to note is that liquifying that amount would require all of the plaintiff’s assets to be sold and that would not ordinarily be a quick process. Any type of “fire sale” is likely to adversely affect the value of the assets to be sold. Some of the types of assets held by the plaintiff, such as mining tenements, may not be readily saleable. The second matter to note is that in terms of current assets over current liabilities revealed in that balance sheet, the position is a deficit of about $10m. [8] Taking into account the known refinance that should shortly occur with a related entity, that for present purposes can be referred to as Samuel, the plaintiff says that least favourably to the plaintiff the overall positive position of $30m can be adjusted down by $19m to reflect the additional liabilities to be incurred in the refinance ($23.5m less the $4.5m Choice facility that will be repaid in the refinance). Everything else remaining the same (on the basis that ongoing liabilities will be met from the refinance funds over the next 18 months or so) there will remain assets over liabilities come the first half of 2026 in the amount of about $11m which is more than sufficient to meet any adverse costs orders made in the substantive proceeding should the plaintiff’s case fail (estimated say at $8m). [9] Whilst that analysis by the plaintiff has an attractive simplicity to it, I am not satisfied that it is a reflection of the true future position. It takes too optimistic a view of the plaintiff’s financial position. -- 4 of 18 -- 5 [10] I am persuaded to the belief that the plaintiff will be in a significantly worse financial position come the first half of 2026 in terms of its ability to pay an adverse costs order. [11] First, as mentioned above, I take into account that liquifying the amount required to meet an adverse costs order would require a significant portion of the plaintiff’s assets to be sold and that would not ordinarily be a quick process. Any type of “fire sale” is likely to adversely affect the value of the assets to be sold. Some of the types of assets held by the plaintiff, such as mining tenements, may not be readily saleable. [12] Insofar as the plaintiff’s assets that could be sold include large amounts of shares (for example in SolGold) I do think that regard has to be had to the likelihood that the price the shares could be sold at would be adversely affected by a “flooding of the market” which I do not consider could be wholly avoided even with staged sale given the amount of shares involved. [13] Second, I am not prepared to positively conclude that the price of the shares to be sold in both SolGold plc and Atlantic Lithium Limited will be significantly less than the current share price by the time those shares came to be sold simply by reason of an apparent recent downward trend in the value of those shares. But I am not prepared to infer that they would go up: some small allowance for the downward trend continuing is allowed. [14] Third, without finally determining the various construction arguments propounded by the parties about the Facility Agreement and GSA underlying the financing to be obtained by Samuel, which it is then extending to the plaintiff, I do take into account that there does appear to be real hurdles in the way of liquidation of the assets of the plaintiff over which Samuel will hold security, because of obligations Samuel will owe to its own lenders. [15] Fourth, I take into account that the expenditure that has been allowed for to be covered by the Samuel refinance does not, in a significant way, account for anticipated spending of the plaintiff that was referred to in the annual report for the purpose of maintaining tenements. The annual report (page 80) refers to the Group having certain obligations to expend minimum amounts on exploration in tenement areas or obligations to complete defined exploration budgets. A spend of $19.8m over the -- 5 of 18 -- 6 next year is identified, and a further $11.7m over the next 1 to 5 years. It describes the amounts as “Committed at the reporting date but not recognised as liabilities”. Whilst it is for the management of the plaintiff to work out what it will actually spend on such maintenance costs, and it seems to suggest it is planning to spend far less than those amounts referred to in the annual report, I would infer that in fact the expenditure will inevitably be more, or, the value of the assets would be adversely affected by the failure to expend the appropriate maintenance costs. Either way, the plaintiff’s overall financial position will be worse than anticipated. [16] Fifth, I am not prepared to conclude that the terms of the refinance with Samuel are per se a bad deal for the plaintiff. What I take from the Samuel refinance and its terms is that the plaintiff’s financial position is such that it can not secure tier one or tier two type lending, or lending without some contingency fee type arrangement linked to the outcome of the litigation, and that is suggestive of a corporation facing financial difficulties now and forward looking. [17] Sixth, there are several matters that point to the plaintiff’s financial deterioration including reduced cash at bank, the Samuel refinancing, the deficit in current assets over current liabilities, etc, but I also take into account that there are upcoming liabilities to be dealt with where there is no apparent plan of how those liabilities are to be paid – note in particular the substantial entries of about $1.5m and $9.4m in the table at page 75 of the annual report. There also appears to be a loan that was repayable on 16 December 2024 to EFH in the amount of about now $3.5m which little information regarding repayment has been provided (page 4 of Appendix 5B of the quarterly activity report ending September 2024). [18] Together, the above matters persuade me to a belief to the requisite level that the plaintiff will not be in a position to meet an adverse costs order against it at the time that such an adverse costs order would become payable. [19] The defendants’ onus to satisfy the threshold test having been satisfied, the onus shifts to the plaintiff to demonstrate a reason why security should not be ordered. -- 6 of 18 -- 7 Discretionary matters Delay [20] I previously made directions: (a) in both then proceedings on 22 December 2023 that the then defendants file any applications for security for costs by 5 February 2024, with the applications returnable on 14 February 2024; (b) in both then proceedings on 18 March 2024 that the then defendants file any applications for security for costs by 22 March 2024, with the applications returnable on 12 April 2024; (c) in the consolidated proceeding on 22 July 2024 that the current defendants file any applications for security for costs by 29 July 2024 (with no return date then scheduled). [21] No application for security for costs was made in compliance with any of those directions. [22] The non-compliance with the first two directions in my view can fairly readily be given little weight. That is because in response to the then defendants’ agitation in respect of security for costs at that time, the plaintiff’s express position to the defendants was that any application for security for costs at those times would be premature in circumstances where it intended to consolidate its two proceedings, otherwise amend its proceeding, and add additional defendants to the proceeding – see the plaintiff’s letter of 5 March 2024. The position of the defendants at the time appears to have been accession to the plaintiff’s position (letter of 22 March 2024) such that no applications for security for costs were then filed. The defendants expressly reserved their rights to apply for security for costs at a later point in time. [23] Given the virtually agreed position of the parties about the timing of the security for costs applications at the time, it would have been sensible for the parties to advise the court that they all considered any application for security for costs at the time premature and on that basis sought the vacation of those directions. The directions would then have likely been vacated – the court would have been very unlikely to require security for costs applications to be brought at a time when both parties submitted it would be premature. -- 7 of 18 -- 8 [24] The non-compliance with the third direction is of more concern. That direction was made at a point in time at which all the current defendants had been joined to the consolidated proceeding. Trial dates (then 2 weeks, possibly up to 3 weeks) were then set to commence on 2 December 2024. It was a logical time for applications for security for costs to be determined as any later applications might imperil the then assigned trial dates. Assuming any filed security for costs application would have been accommodated for hearing as soon as possible in August 2024, a decision on security could have been expected about 3.5 months before the trial was due to commence. [25] The correspondence about security for costs at that time recommenced on 19 July 2024 and comprised: (a) Perpetual defendants’ letter of 19 July 2024; (b) plaintiff’s response of 25 July 2024; (c) the sixth defendant’s letter of 25 July 2024 which addressed the plaintiff response letter above; (d) plaintiff’s further response of 30 July 2024. [26] That correspondence can be summarised as follows. The Perpetual defendants expressed, based on documentation then available to them, fairly detailed reasons as to why they held real concerns about the plaintiff’s ability to meet an adverse costs order. A response was invited. The response of the plaintiff was to advance a similar argument as to what it advanced in this application about the threshold test – effectively the plaintiff has a net position exceeding $49m (then) and so security for costs would never be ordered. The sixth defendant responded by identifying particular detailed concerns and asking for documentation from the plaintiff that may help assuage those concerns. Before a response had been received, the time limited for the filing of security for costs applications lapsed on 29 July 2024. Whilst non- compliance with court directions is rarely acceptable, it can be readily understood why the defendants would not have filed an application that might be unnecessary depending upon the response of the plaintiff. [27] The plaintiff’s response was to decline to provide any further information to the defendants. Its position was that it did not have to (which was true), and it would not. -- 8 of 18 -- 9 It advanced the proposition that if the defendants were to proceed with an application for security for costs on the basis of the material the defendants were then able to put before the court, the application would fail. There is much to be said for that proposition advanced by the plaintiff. The defendants must have thought so too, as consequently no applications for security for costs were brought at the time. [28] The proceeding progressed. [29] The issue of security of costs did not arise again until 27 November 2024, initially by the sixth defendant, with the other defendants following thereafter. The sixth defendant wrote to the plaintiff referring to new information that it had come into possession of as re-enlivening its concerns about the ability of the plaintiff to meet any adverse costs order. The defendants identified at a review held on 3 December 2024 that they would all make security for costs applications. The plaintiff continued to maintain that no security for costs would be provided – letter of 11 December 2024. The applications for security for costs were filed. [30] The defendants point to two material changes of circumstances that justify the court entertaining the applications now. [31] The first concerns what is alleged to be further information about the plaintiff’s alleged deteriorating financial position. That is submitted to be evidenced through documents not available at the time that the defendants were previously directed to file applications for security for costs. In particular, reliance is placed on: (a) the plaintiff’s annual report for the year ending 30 June 2024 that is dated 30 September 2024; (b) the plaintiff’s quarterly activity report for the quarter ending September 2024; (c) the plaintiff’s public announcement on 25 November 2024 in respect of the Samuel refinancing facility – terms of that facility were disclosed to the defendants in late December 2024 as part of the plaintiff’s evidence in the substantive proceeding.1 1 Effectively initial finance of up to $9m with the potential for a second tranche of up to $14.5m. That should be considered in the context of the plaintiff having current liabilities of about $9.9m. -- 9 of 18 -- 10 [32] The second concerns the plaintiff’s recent indication that it would be seeking leave to further amend its case. On 29 November 2024 the plaintiff served an interlocutory application seeking to file and serve a third further amended statement of claim. That has been the subject of a different hearing. [33] Together the defendants say having regard to those two matters, that the complexity of the plaintiff’s case has grown whilst its financial position has deteriorated. [34] Even considering that: (a) the proceeding (albeit in a different form and with different substance) has been on foot since late 2023; (b) there have been three directions made by the court in respect of the time limited for the filing of security for costs applications; (c) the applications for security for costs have been made significantly after those times; (d) the scheduled trial is only some 3.5 months away (but noting the time between when the applications last should have been filed and heard and the then trial dates was about 3.5 months also), I do not consider those matters in this case result in the position that either security for costs should not be awarded at all, or not at all in respect of past costs. [35] The delay in making the applications is in my opinion, adequately explained and not of a nature to deprive the defendants of security for costs of itself. However the delay must be considered in conjunction with other relevant matters considered below. The plaintiff has proceeded on the assumption of no security for costs [36] The plaintiff’s solicitor has given hearsay evidence in the applications that absent the defendants making applications for security for costs in compliance with the court’s directions, the plaintiff: (a) proceeded on the basis that the defendants would not be able to make any such applications at a later point in time; (b) negotiated and arranged the Samuel refinance without regard to any possible requirement to provide security for costs; -- 10 of 18 -- 11 (c) incurred very significant costs in prosecuting the proceeding. [37] The plaintiff’s evidence is that had an earlier applications for security for costs been made as directed, then the plaintiff would have taken steps to arrange its financial affairs so as to enable the provision of security, whilst maintaining its ability to fund its own costs of the proceeding and maintain other cashflow requirements of the plaintiff. [38] I do not find that evidence particularly persuasive. A plaintiff is always at risk of having to provide security for costs, even if it has defeated an earlier application for security for costs. Security for costs, even late security for costs, can be appropriate where there has been a material change of circumstances, particularly with respect to the financial position of the plaintiff. [39] The plaintiff is the person in the very best position, having the most evidence to know what is its financial position at any point in time and what might be inferred from that into the future. [40] The plaintiff has always maintained and continues to maintain in this application that the threshold test for a security for costs order is not met. I disagree considering the evidence before me at the present time. [41] The plaintiff should have always been prepared for the possibility of being ordered to put up security for costs. The issue never fully went away. [42] I accept that the plaintiff in fact has not prepared itself for the possibility of being ordered to put up security for costs and that is a separate matter considered below. [43] In my view, the circumstances of this case are not where the fact that the plaintiff has acted on an assumption that no security for costs would be required to be provided, disentitles the defendants to an award of security for costs in their favour. The imminency of the trial [44] The four week trial is scheduled to commence on 22 April 2025. The proceeding, on my assessment, still looks far from ready for trial. No party has made an application for an adjournment. All parties keep on assuring me that they are all keen -- 11 of 18 -- 12 to have the trial as scheduled and are working hard towards the trial dates. I have no reason to believe otherwise. [45] But I do not think any imminency of the trial is a matter that significantly tells against an order for security for costs in this case. The trial is still some months away. The applications for security for costs were foreshadowed in November 2024. Practical issues with the provision of security [46] The plaintiff’s evidence is that if the plaintiff were ordered to pay security for costs now, given its cashflow requirements for its business: (a) it could not pay any significant amount within 14, 28 or 42 days; (b) it would need to take steps to obtain further funding to provide security for costs and the availability and terms of any such funding is uncertain. [47] The plaintiff does not say what significant security means. Its senior counsel suggested it might be able to be inferred as something more than the available cash at bank, which the quarterly activities report as at end September 2024 identifies the amount of approximately $235,000 (as compared to $1.918m at the end of the previous quarter). Absent any information to the contrary, that is reasonable inference for me to draw. [48] All of the defendants, bar the third and fourth defendants, in acknowledgement of the plaintiff’s evidence and cognisant of the risks that usual orders for security in this case would likely jeopardise the scheduled trial dates, agreed that the court, if it orders security for costs, ought require that such security only be required to be paid by mid- March 2025. [49] That would be an unusually long period of time to permit security to be provided by a plaintiff, but in this case would have the advantage that the parties could be required to continue working towards the trial dates and no stay of the proceeding, if security was not provided, would occur until mid-March 2025. [50] It is obviously not to the benefit of the defendants for them to continue to expend costs if in fact security is not provided when ordered and the proceeding becomes stayed. The third and fourth defendants seek more usual orders that any security ordered be paid within 14 days. -- 12 of 18 -- 13 [51] The plaintiff has not put on more evidence that might permit me to have a detailed understanding of the process for the plaintiff securing security for costs, including what steps (if any) it has taken since these applications have been foreshadowed (since late November 2024). It has new financing from Samuel coming and whilst that refinancing is presently committed for certain other expenses, the plaintiff has not apparently made enquiries about Samuel consenting to a reallocation of the use of some of those funds for security. It has sworn that under the Samuel facility the net amount of working capital that will be available to the plaintiff is approximately $8m and in terms of timing the target date for the plaintiff’s access to those funds is 31 January 2025 (but more likely end February 2025 for various reasons the plaintiff explains). [52] I am left in a position where what I know is that some arrangements are going to have to be made for the plaintiff to provide security if it is ordered to do so, but how long that may take and what are the risks of security not being able to be provided at all, are somewhat speculative. It is a factor though to be taken into account. Stifling of the proceeding [53] There was an oral submission made on behalf of the plaintiff to the effect that there was a risk that an order for security for costs may stifle the litigation. That submission did not have a strong evidentiary basis and appeared to catch at least some of the defendants by surprise. [54] It is not a matter to which I am prepared to give any significant weight. Such a submission would ordinarily need to be supported by express evidence adduced by the plaintiff of terms of security that if such, or more onerous, terms were ordered, would result in the plaintiff being unable to proceed with the litigation. There is no such evidence. Persons standing behind the litigation [55] An interesting issue arose during the oral hearing about the consequences of the plaintiff being a public company. [56] One of the factors a court will commonly consider in a security for costs application is the willingness of the persons standing behind the plaintiff company, who stand to -- 13 of 18 -- 14 benefit from the plaintiff company’s success in the litigation, to make themselves responsible for any adverse costs order that might be made against the plaintiff. [57] There is no obvious reason in principle to distinguish between a public and private company in that regard. In either situation there is a possibility of a large range of shareholder numbers with different interests. In either case there are ways in which the shareholders can make themselves responsible for an adverse costs order. [58] Here there is no evidence that any of the shareholders are prepared to step out behind the corporate veil, or that any enquiries have been made in that regard. [59] The partial exception would be in respect of Samuel (who is a major, but not the major, shareholder2) who by the refinancing arrangement planned has at least shown a willingness to fund the litigation in part for the plaintiff, in return for a share of any proceeds of the litigation – but offers no protection to the defendants for their costs. [60] This is a factor to be borne in mind that favours security for costs being awarded. Prospects of the plaintiff’s case [61] In my view, the apparent prospects of the plaintiff’s case overall (so far as they can be ascertained at the present time) do not either favour or tell against an order for security for costs. I proceed on the basis that the claim is bona fide with reasonable prospects. If the defendants are the reason for the plaintiff’s impecuniosity [62] By the proceeding the plaintiff contends that conduct of the defendants have caused it significant financial loss and so any impecuniosity of the plaintiff (which the plaintiff otherwise denies) could be alleged to be consequent upon the conduct of the defendants which would be a factor against the ordering of security for costs. That was not a submission seriously advanced on behalf of the plaintiff and therefore a matter that I will give only a small amount of weight. 2 Samuel Holdings Pty Ltd is a related company to the plaintiff and is controlled by Mr Mather. Mr Mather is the plaintiff’s managing director and chief executive officer, who holds a 17% interest in the plaintiff. -- 14 of 18 -- 15 Balancing of the relevant factors [63] Having regard to all of the factors set out above, I am not persuaded that I should not order security for costs and I intend to do so. Quantum [64] The quantum of security to be ordered is not a matter entirely separate from the discretionary factors identified above. Those discretionary factors are relevant to the assessment of any security for costs to be awarded and the terms upon which security might be structured. [65] Other matters to be considered in the assessment of the quantum of security for costs include: (a) that security for costs is not intended to provide for a complete indemnity; (b) a broad brush approach to security for costs is usually appropriate; (c) that any discount on calculated estimated costs on account of general contingencies (which is a usual but not mandatory part of the assessment of quantum of security for costs) can be affected by considerations such as (not exhaustively): (i) how early in the proceeding security is ordered; (ii) the known progress of the proceeding to date; (iii) the likelihood of settlement; (iv) how accurate the costs estimate is likely to be; (v) the type of case and its apparent complexity. [66] This is the basis upon which I approach the competing assessments to arrive at the security I will order: (a) I do not consider it necessary that the standard costs claimed by each defendant for solicitors at the same level, and barristers (senior and junior), be the same in terms of rates. For example, just because one senior barrister might be charging $8,000 a day does not mean that other senior barristers will not be -- 15 of 18 -- 16 recoverable at a higher rate on the standard basis. The rate needs to be an appropriate rate for the particular case; (b) I think it can be reasonably assumed that the work rate (hours spent per week or month) will increase as the trial gets closer, particularly given the steps remaining for the defendants to be ready for trial. Accordingly, time spent and costs incurred to date (considered on a weekly or monthly basis) provide a reasonable baseline comparison of work rate; (c) The work currently required to be undertaken by the defendants to be ready for trial can be ascertained with some certainty as the proceeding is somewhat advanced and the time to trial somewhat limited. Accordingly, I am not inclined to make a large discount on account of general contingencies (including in respect of the prospect of settlement, which seems to me remote). Something moderate in the order of about 20% is appropriate. That general contingency type discount will only apply to future costs; (d) In all of the circumstances an amount for past costs should be allowed but discounted in a meaningful way. That includes because there have been several interlocutory matters where costs have been reserved and where those costs might ultimately fall is presently not clear. I intend to adopt a discount in the order of about 50%. I adopt that the original defendants are only seeking past costs back to April 2024 which favours the plaintiff; (e) I also consider the amount to be ordered in respect of each party and overall in the context of all of the circumstances including any likely future award of security for costs for the four week trial (that could readily be in the order of $1.6m, based on my estimate of $20k per day of the trial per party below). -- 16 of 18 -- 17 [67] My calculations follow: Party Approx amount for past costs, 50% of amount in brackets (estimated standard costs) Approx amount for future costs,3 80% of amount in brackets (estimated standard costs) Approx total security, total of two preceding columns Security ordered in all of the circumstances (up to and including first day of trial) Perpetual 400,000 (800,000) 600,000 (750,000) 1,000,000 965,000 Receivers and ADZ 375,000 (750,000) 680,000 (850,000) 1,055,000 995,000 Shunkang 185,000 (370,000) 480,000 (600,000) 665,000 650,000 Baker McKenzie 250,000 (500,000) 640,000 (800,000) 890,000 850,000 3,460,000 How security should be structured [68] I am concerned to give the parties the best possible opportunity of maintaining the existing trial dates. The trial commences 22 April 2025. Security will need to be provided by 4pm on Friday 14 March 2025 – four weeks before the commencement of the trial. [69] Tranches of security, for the security to be presently ordered, are not appropriate given the short time to trial and the extended time given for the payment of security. Outcome on security for costs applications [70] I order that: (a) The plaintiff provide security for costs of the proceeding by 4pm on Friday 14 March 2025 in a form acceptable to the Registrar. (b) The security for costs be $3,460,000 calculated as: 3 Up to and including the first day of trial. -- 17 of 18 -- 18 (i) $965,000 in respect of the first and second defendants; (ii) $995,000 in respect of the third and fourth defendants; (iii) $650,000 in respect of the fifth defendant; (iv) $850,000 in respect of the sixth defendant. (c) The security for costs ordered is in respect of the period from the commencement of the proceeding to the first day of trial (inclusive). (d) Rule 674(a) UCPR does not apply to this order. (e) The defendants have leave to make any application for any top up security or for security for costs in respect of the trial not before 24 March 2025. (f) Costs of the applications be reserved. [71] The parties will be before me on another interlocutory application tomorrow, so if there are any issues about the orders I have made I will deal with that then. -- 18 of 18 --